Marketing implementation: building and sharing real

Marketing implementation: building and sharing real market understanding Nigel F. Piercy and Nikala Lane

Marketing implementation

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Introduction It has been widely argued for the past decade or so that the critical issue faced in marketing practice is implementation and the organizational change that is associated with implementation, and the need to integrate better planning and execution processes – for these arguments e.g. see Bonoma (1985), Cespedes and Piercy (1996), Piercy (1994), Piercy and Cespedes (1996). Indeed, it is quite explicit in modern views of market orientation that flows of information and intelligence are central to achieving market orientation (Kohli and Jaworski, 1990). However, what is generally less widely available are practical, operational tools for managers to work on such issues in real companies. The purpose of this paper is to share an approach to one fundamental marketing implementation issue. This technique is not a theoretical proposition, but is a method developed with companies for practical purposes and has proved effective in that context. The issue on which we are focusing is whether managers genuinely believe that their markets are changing, bringing the need for strategic change by the company, or whether they will fight to retain the comfort and familiarity of the status quo – no matter what rational evidence is presented to them. The goal of the technique is to develop a process of environmental scanning that leads to a real and developing understanding of the market faced. The logic of the approach can be developed through the following stages. Do we think we have a problem – or else why should we change what we do? An observation is that people and groups in organizations differ in two vital respects, when it comes to developing and implementing new plans and strategies for the market: a belief that there actually is a problem to solve; and the willingness to change. Indeed, the willingness to change has been shown to be critical to developing a marketing culture (Norburn et al., 1990), and achieving other positive organizational outcomes. More generally, recognizing the issue of human resources in marketing management has been linked to marketing effectiveness, and failure here has proved a constraining influence on the adoption and effective implementation of marketing strategy (McNamara, 1981). Such observations have led to the model in Figure 1. This model suggests that when we look at the marketing implementation strategy issue, we may find people to be:

Journal of Marketing Practice: Applied Marketing Science, Vol. 2 No. 3, 1996, pp. 15-28. © MCB University Press, 1355-2538

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Do we have a problem? Yes

No

Ready to go

Blissful ignorance

Worried stayers

Closed minds

Yes

16 Are we willing to change? Figure 1. Marketing implementation and “how we see things here”

No

and frightened rabbits

•

Ready to go – people know what the problems are and they are prepared for the changes needed to address those problems. • Blissfully ignorant – people are open-minded, always willing to talk, attend seminars, read books, and so on, but they just do not change things because fundamentally they do not believe there is a need to change. • Worried stayers – those who do believe there is a problem, but also believe that if you just keep plugging away, doing the same things, everything will work out all right in the end. • Frightened rabbits – those who do see the problem, but believe that if you keep looking at it, it will go away. • Closed minds – those who believe they have got it right, so reject out-ofhand anything different. Executives often laugh at this model, and regard it as silly. At least they do until they are challenged to deny the evidence that these situations exist in their own organizations. This type of conversation can lead to the more serious propositions in Figure 2, suggesting that achieving the implementation of new market strategies is about both illuminating the problem, and unfreezing the inertia, to “create a new reality” where effective change is possible. The underlying logic is simple: if people do not deeply believe in the need for change, then they will not be committed to it. However, gaining this belief may be far from as straightforward at it might seem. The way we see things here The underlying problem is that telling people what their problems are, and by implication to get their act together has proved to be a singularly ineffective

Do we have a problem? Yes

Yes

No

Marketing implementation

A

17 Are we willing to change?

No

B

C

Key A = Illuminate the problem B = Unfreeze the inertia C = Create a new reality

approach to winning people’s commitment and achieving effective strategy implementation. This is for a number of reasons. First, corporate culture may be such a barrier that they simply do not believe us. Culture has been defined as a system of shared values and beliefs which interact with organizational processes to produce norms, and thus the view that culture is “the way we do things here” (Uttal, 1983). Cultural norms are therefore a powerful tool in shaping the behaviour of employees (Schwartz and Davis, 1981), and it has been suggested that effective companies are the ones with “distinguishing cultural profiles” (Dunn et al., 1985). Indeed, even early writers recognized that obtaining the proper “state of mind” from employees was a key determinant of marketing effectiveness (Felton, 1959; Fram, 1965). Accepting the critical role of corporate culture in determining the way managers and employees behave, we propose an alternative definition of culture as “the way we see things here”. This includes the process of selecting the information we accept and what we reject, the issues we monitor and those we ignore, and all the assumptions we make inside the organization about the outside world – what works in this market and what does not, who the competitors are and how they respond to competitive challenges, what matters to customers, how the market is changing or not changing, and so on. It matters little if we call this “environmental enactment” (Weick, 1969), which is what it is; the underlying point is that people in organizations develop simplified models of the world which become their shared understanding of the world. The problem arises when that shared understanding becomes out-dated and inflexible, and yet we still cling to it – and, after all, we must be right because everyone around us agrees (Janis, 1982).

Figure 2. Marketing implementation by changing “how we see things here”

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Second, “telling” people what their problems are is unlikely to gain their “ownership” of those problems. It has become widely recognized that problemsolution is enhanced through effective internal communications in organizations (Kohli and Jaworski, 1990; McNamara, 1981), but communication effectiveness demands that we recognize the importance of employee and manager perceptions of events and the strength of two-way communication to identify problems in those perceptions (Webster, 1995). Quite simply, it is naïve to expect attempts at one-way communication to change people’s minds about things. Third, it is too easy to be simplistic in assuming that we know how managers search for information and use it when they have it for decision making. There is abundant evidence to suggest that the information search and use in organizations is complex and reflects many needs other than making better decisions (e.g. see Piercy, 1992; Piercy and Evans, 1994). Changing the way we see things here It follows from this argument that a critical precursor to implementation is that the people who have to change in a company see the need and reasons for change, but just telling them does not seem to work. This suggests the need for an approach to improving the understanding that managers and specialists have of their markets, which uncovers the problems to be solved and identifies the new challenges to be met, but which involves “finding out” what matters, not just being told. In this situation the role of the marketing planner or analyst becomes one of managing the process of market understanding, not simply the provision of information and conclusions. The approach described below is a simple method of achieving some of these things. An approach to managerial scanning The approach to scanning the environment discussed here is simple and accessible to managers. The goal is simply to provide a structure for executives and planners to articulate what they know about changes outside the company, and to identify the most critical gaps in that knowledge. From a user’s point of view there are two stages. First, the framework in Figure 3 provides a mechanism for capturing information. We need to specify at the top the environment to be evaluated and the dimension of the environment to be analysed on this particular sheet (see comments below on how to manage these choices for maximum effect). The time-frame (normally three to five years) and the market in question also should be specified. The task then is to brainstorm the events in the chosen part of the company’s environment which might take place or which are currently developing. The most important events are listed on the form (and also mnemonic codes for ease of reference). However, the framework also requires that we identify specific effects on the company if this event takes place. If we cannot do this, the event is too broad

Environment:

Time-frame:

Dimension:

Market:

Marketing implementation Probability*

Events

Specific impacts

Effect**

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1. Code: 2. Code: 3. Code: 4. Code: 5. Code: 6. Code: ** Probability: high, medium or low; or 0-100 per cent ** Effect: 1 = disaster; 2 = very bad; 3 = bad; 4 = neutral; 5 = good; 6 = very good; ** 7 = ideal

and should be defined more narrowly, or it is unimportant to our analysis. For example, events like “Single European Market” or “change of government” are normally too broad. If the impact of an event includes some good things and some bad things, we should separate these and look at the event as two issues, for ease of analysis. Then, we need to do two further things: assess the current view of the probability of the event happening (initially a subjective “guesstimate” which we may want to test and evaluate further), and the likely effect of the event on the business if it does happen (the suggested scale runs from 1 = disaster to 7 = ideal, and again this is something on which we may want to take an initial view which can be refined at a later stage). We can complete as many of these forms as we need to build a full view of the most important aspects of the environment as they impact on the company. Second, the events (or their codes) are then entered on the model in Figure 4 – positioned by the scores we have placed on the probability of each event occurring and the effect of the event if it does occur. The broad types of event are categorized into:

Figure 3. A framework for environmental appraisal

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High

Probability of event occurring Medium

Low

7

6

Field of dreams

Utopia

20 5 Effect of event

Things to watch

4

3

2

Figure 4. A model for environmental appraisal

Danger

Future risks

1

• •

Utopia – events with a very good effect which are very likely to occur. Field of dreams – events which are highly desirable but seem unlikely to happen the way things are at the moment. • Danger – events which are very threatening to the company and which are very likely to happen. • Future risks – undesirable events that seem unlikely to happen, but which we may want to monitor in case they become more likely. • Things to watch – where we do not see the probability as very high and the impact is relatively neutral, but where monitoring is needed in case either of these changes. What we now have is a model of the outside world, which we can use for testing the robustness of proposed market strategies, identifying information gaps, and evaluating market attractiveness. However, making this truly effective is far more about how the process of scanning the environment is managed, rather than just filling in forms and building models. Managing the process of understanding the environment The methodology described above is very simple to implement. It is accessible and provides a structure for the information and intelligence in the company, and captures a picture of the outside world as it is currently understood in the company. This is, however, only a starting point in achieving our goal of building and sharing real market understanding so that it impacts on strategic

decisions and implementation. There are a number of key issues to be addressed in managing this process, which are summarized as a checklist in Table I, and discussed below. The first two points relate to how to focus thinking to the maximum advantage, the next three are concerned with linking environmental scanning to planning, and the last points address the issue of how to enrich the scanning process.

Questions

Examples

Goals

What environment needs addressing better to improve our market understanding and our market strategies?

Business, market competitive, technological, legal, international environments

Focus on the area where our assumptions are weakest

How should we subdivide the environment to analyse it more effectively?

Business environment: political, economic, social and technological

Focus on the most critical aspects of the chosen environment

How should we interpret the impact of changes we identify in the environment?

Impact on customer/supplier relationship. Impact on market size and share

Link to planning by confronting the importance of change to our strategies

Who should interpret the picture built and what are the critical questions they should address?

Planning team to specify in writing: how we are exploiting the good things and defending against the bad things in our strategies, and how we are monitoring the most critical issues

Link to planning by challenging conventional views about strategies and information needs

How do we link our new understanding to decision making?

Plans must state explicitly how they reflect changes in the most critical aspects of the environment

Link to planning by demanding that issues are addressed and not ignored

What information should be provided?

Published studies, reports, corporate intelligence, etc.

Enrich the process by stimulating thinking

Who should be consulted/involved?

Planning team, cross-functional representatives, line managers, suppliers, customers, outside experts

Enrich the process by bringing more viewpoints to bear to challenge conventional assumptions

Choosing the environment The first issue is what approach to the outside world is potentially most needed to confront change and influence behaviour in the company. For example, the basic framework described above has been used to evaluate the business environment; the market environment; the competitive environment; the

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Table I. Checklist for managing the scanning process

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technological environment; the legal environment; and the international environment, in different companies and to deal with different types of problems. For example, in one clothing company we used the most general version of the model (the business environment), and the model produced by executives was “Utopian” in the extreme – i.e. every event they could identify in the environment around their business fell into the Utopia cell of the model shown in Figure 4. This suggests that managers believe they know everything and everything is good. When asked if they had considered renaming the company the “Smug Corporation”, the executives said things like “You have to understand, we do not have competitors, only imitators”. When the scanning was refocused on to the competitive environment, their views started to change quite dramatically. If this sounds far-fetched, remember it is only a few years ago that retail bankers in the UK firmly believed that building societies and insurance companies were not really “competitors”! Subdividing the environment to focus attention The second point of focus is how to subdivide the environment to ensure that people address the most important aspects, and highlight the gaps in understanding that are most critical. For example, with one high-technology company which was led by R&D and driven by scientific innovation in product, one glaring omission in management thinking was about competition – as evidenced by recent new product failures and as claimed by the company’s marketing manager (who felt he was largely ignored). This problem was approached by asking teams of managers associated with new product projects to include an environmental scan in their planning. This addressed the competitive environment, and this was subdivided into: direct competition (i.e. other companies in the same industry producing the same type of product); customer competition (i.e. the tendency in key markets for customers to develop their own materials and to substitute this for product purchase; and generic competition (i.e. different technologies capable of serving the same customer needs). This has become a permanent and essential part of the company’s new product planning, because their views on market positioning have changed dramatically, developing, for example, into deals with key customers to help them produce their own products and collaborations with companies outside the industry to use the newer technologies becoming available to meet customer needs. Identifying the impact of environmental changes If events that happen outside are of any importance it is because they influence something that matters to the company. There is advantage therefore in addressing at the earliest stage what these impacts may be. For example, in viewing the market environment, we could ask for each event to be analysed in terms of its impact on customer/supplier relationships, or with the competitive

environment, the impact of each event on our market share. The aim is to encourage thinking to be very specific to the company and its goals. Interpreting the model of the environment for strategy building Probably the most important issue is how we interpret the model of the environment which has been built. Here there are three questions to stress and demand attention. Given that the model is a picture of the things happening outside which we regard as most important to the survival and prosperity of the company, then we should demand responses to the following questions: • We have identified the changes in this market which are potentially very advantageous for our performance in this market, and which are likely to happen (Utopia in the model) – the question is: where, explicitly and realistically are we exploiting those factors in our market strategies? • We have also identified the changes in this market which are potentially major threats, and which are also likely to happen – the question is: where, explicitly and realistically are we defending against these changes in our market strategies? • If it has been done properly then the model we have produced shows the things that are most important to our position in this market – the question is: are we monitoring and evaluating these factors in our marketing information system? It is amazing how often executives have to admit that their plans and strategies do not address the real changes in the marketplace where they intend to operate – this is the moment when new thinking about strategies may become possible for the first time, because managers are confronted with their own logic. Even more surprising are situations where managers are forced to admit that their information systems do not focus on the things that really matter to their performance – the systems report the figures and statistics that are easiest to report and that have always been reported. For example, precisely this situation was found in work with a wholesaling company. The company essentially has a sophisticated telephone marketing system, selling specialized wooden furniture to schools and homes and training centres for the disabled. In undertaking a view of the business environment, at a boardroom level, one conclusion reached was that just about the most significant factor for profitability was merger and acquisition activity in the furniture manufacturing sector, which led to increased pressure on the wholesaler’s margin. The point is that nowhere in the company was there any monitoring or evaluation of this merger activity – every new merger was a surprise. Managers objected that it was not possible to have advance information on mergers and acquisitions. They are quite right. However, few such events take place without gossip at the exhibitions and trade events and without comments in the trade press and so on. The data may be soft, but maybe that is more use to the board than sitting back and waiting to be

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surprised again. People often suggest it is an exaggeration, but it seems all too often the case that we do not watch the things that really matter because the information does not fit the computerized information system. There is also another type of question that can be raised around our model of the environment: • Are there things we can do to reduce uncertainties around important issues, to improve the power of the model? • Are there things we can do to change the position of events in the model? An initial response to the first of these questions may be negative. This is not always necessarily true. For example, in work with a company targeting the water industry in the build-up to privatization, one major unknown at the time was the form that privatization would take, which was a barrier to developing market strategies. Clearly the government is unlikely to provide such information ahead of time – but it was possible to go to a specialized agency in contact with senior civil servants and politicians and to get a pretty good idea of the plans, which is what the company did. To some the second question may appear even more outlandish – how can a company change the environment? Clearly in the general sense it cannot. However, the point of making the whole exercise focused bears fruit here. If, for example, the largest issue in the “danger” area is competitive entry with a new product, then maybe the strategy to pursue is one of collaboration. This is an area where creative thinking may become possible, as we ease people away from the status quo represented by corporate culture. For instance, this year in the USA, Hershey, the chocolate company, came very close to persuading the federal authorities to change the date of the change to daylight saving time into November, instead of being in October. The reason is that an extra hour of daylight on 31 October – Halloween – is worth several million dollars worth of extra chocolate sales in the USA. The company failed in this attempt, but it remains surprising how creative thinking may be about “unchangeable” events in the environment, given the chance. Linking market understanding to plans If the benefits of this model are to be realized, then the conclusions reached by scanning the environment that matters should be linked to the decisions made about market strategies. This may take no more than agreement that strategic market plans must state explicitly how they reflect changes in the most critical aspects of the environment. Providing information as a stimulus to thinking Another decision requiring careful thought is what information should be provided to the executive and planning teams scanning the environment, through written reports, presentation by outside experts, and so on. The key to handling this seems to be not to overload people with new information but to provide enough that is new to help people break the mould. Certainly, it is

disastrous at any point to suggest to people that they are wasting their time because everything has been done before by “corporate intelligence” or by “market research” departments. The aim here is to enrich the scanning process, not to truncate it. Who should be consulted and involved? Perhaps the most actionable lever for enriching the scanning process is in consultation and participation. The argument is clear: it is that consultation with managers and employees and their participation is critical to determining their responses to market developments (Harris, 1996; Kohli and Jaworski, 1990). This follows the principle that giving discretion to managers and empowering them to find solutions and innovations is a powerful lever for strategic change which should not be underestimated (Thompson and Richardson, 1996), which ultimately should be reflected in organizational reward systems to reflect successful contributions to effective responses to market needs (Jaworski and Kohli, 1993). Clearly, the marketing analyst can use the framework provided here to undertake an appraisal of the market environment as an individual exercise, but this is unlikely to impact on the problems we set out to solve, and ignores a major opportunity to build consensus on the need and direction for change. The issues to consider in managing participation in this type of exercise are: • A team – if we want “ownership” and commitment, then we need to involve the key players in implementation in the analytical stage of planning, for how else can we get a “buy-in” to new strategic directions? • Cross-functional representation – one of the most powerful levers for change in major corporations is the use of the powerful and informed cross-functional team which pools specialized expertise around a focused problem. At the simplest level, it may be that people from operations and R&D can contribute useful insights into market change. At a deeper level, if we expect co-operation and support from other departments for market strategy implementation, then it makes sense to have them involved and consulted in the process. • Line and staff specialists – similarly, managers from line roles and staff roles may bring very different insights and sources of intelligence to the table, and challenge conventional ways of addressing the market. There is also the question of gaining credibility and “buy-in” from line management as a foundation for effective implementation of resulting strategies. • Outsiders – in some situations it may be possible to gain from the involvement of outsiders who bring new information and understanding of the markets we are appraising. This might include suppliers, customers, or experts from the relevant research institutes and universities.

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It may not be possible to exploit all these sources of influence over the creation of market understanding in all cases, and it may not be necessary to do so. The principal points are summarized in Table I as a checklist for consideration in managing the process of building and sharing market understanding with managers.

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Concluding remarks The point of this article is very simple – the tools for building and refining market understanding have to be placed in the hands of the line managers and technical specialists on whom we depend for the effective implementation of market strategies. How can we expect people to commit to something when they do not see the reason for it? This granted, our problem is that marketing researchers, staff planners and analysts can write reports and do presentations, but does this achieve true market understanding where it really matters? The procedures described here have been developed to work with line managers and planning teams to enrich and enhance their understanding of the most critical aspects of their markets, to use this as the basis for developing market strategies of which they may take “ownership” and drive through to effective implementation, with all that is implied in terms of organizational change and disruption to the status quo. The approach described is accessible and easily applied, though it may achieve these characteristics at the expense of sophistication and rigour – the professional analysts and researchers can probably produce a more thorough and certainly a more sophisticated picture of the world – but then we are back where we started and it remains their picture of the world, not the manager’s. The logic is one of sacrificing some sophistication to win commitment – which provides an argument for justifying the approach to managers who may reject the technique on the grounds that others have already done this work – corporate intelligence or market research – and they have no wish to “rediscover the wheel”. If this proposition is accepted, then the methodology here offers the staff planner the opportunity to manage and focus the process of gaining environmental understanding and challenging the myths and stereotypes in the company’s culture and established procedures. This role is one of process designer and manager – not conventional information collector and analyser. To facilitate this role, we have set out an agenda of the issues that have proved most important in practice in using this technique – focusing the attention of managers where it is most important, linking market understanding to planning, and enriching the process to gain a deeper understanding of changes in the marketplace and the need to respond. The significant issues raised here, which merit serious consideration in an organization, can be summarized as follows: • To what degree do we have consensus around the need for change and the market challenges which have to be met – throughout the organization and at all levels?

•

To what degree do we have a clear willingness to change among the people who have to solve the problems and meet the challenges we believe we face? • Are we constrained by our culture, history, and pressure to maintain the status quo, from performing as well as we should against market needs? • If we need to work on our market understanding inside the organization, then who should we involve and how can we exploit the processes of empowerment and team-building to build that understanding and to link it to a renewed commitment to change? • How should we structure the problem, how do we interpret the picture that is built, and how do we integrate it into the planning and budgeting systems? If the answers to those self-audit questions suggest the need for improvement the model presented here may be of value. References Bonoma, T.V. (1985), The Marketing Edge: Making Strategies Work, Free Press, New York, NY. Cespedes, F.V. and Piercy, N.F. (1996), “Implementing marketing strategy”, Journal of Marketing Management, Vol. 12, pp. 135-60. Dunn, M.G., Norburn, D. and Birley, S. (1985), “Corporate culture: a positive correlate with marketing effectiveness”, International Journal of Advertising, Vol. 4, pp. 65-73. Felton, A.P. (1959), “Making the marketing concept work”, Harvard Business Review, Vol. 37, pp. 55-65. Fram, E.H. (1965), “Application of the marketing concept to retailing”, Journal of Retailing, Summer, pp. 19-26. Harris, L.C. (1996), “Benchmarking against the theory of market orientation”, Management Decision, Vol. 34 No. 2, pp. 25-9. Janis, I.L. (1982), Groupthink: Psychological Studies in Policy Decisions and Fiascos, 2nd ed., Houghton-Mifflin, Boston, MA. Jaworski, B.J. and Kohli, A.K. (1993), “Market orientation: antecedents and consequences”, Journal of Marketing, Vol. 57 No. 3, pp. 53-70. Kohli, A.K. and Jaworski, B.J. (1990), “Market orientation: the construct, research propositions, and management implications”, Journal of Marketing, Vol. 54, April, pp. 1-18. McNamara, C.P. (1981), “Time is running out for executives still flirting with the marketing concept”, Sales and Marketing Management, 16 March, pp. 103-4. Norburn, D., Birley, S., Dunn, M. and Payne, A. (1990), “A four nation study of the relationship between marketing effectiveness, corporate culture, corporate values and market orientation”, Journal of International Business Studies, Vol. 3, pp. 451-68. Piercy, N.F. (1992), Market-Led Strategic Change, Butterworth-Heinemann, Oxford. Piercy, N.F. (1994), “ Marketing implementation and internal marketing strategy”, in Baker, M.J. (Ed.), The Marketing Book, 3rd ed., Butterworth-Heinemann, Oxford. Piercy, N.F. and Cespedes, F.V. (1996), “Implementing strategy”, in Warner, M. (Ed.), International Encyclopedia of Business and Management, Routledge, London. Piercy, N.F. and Evans, M.J. (1994), “Developing marketing information systems”, in Baker, M.J. (Ed.), The Marketing Book, 3rd ed., Butterworth-Heinemann, Oxford.

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Schwartz, H. and Davis, S.M. (1981), “Matching corporate culture and business strategy”, Organizational Dynamics, Summer, pp. 30-48. Thompson, J. and Richardson, B. (1996), “Strategic and competitive success: towards a model of the comprehensively competent organization”, Management Decision, Vol. 34 No. 2, pp. 5-19. Uttal, B. (1983), “The corporate culture vultures”, Fortune, 14 September, pp. 66-72. Webster, C. (1995), “On the relationship between the marketing culture of a service firm and marketing effectiveness”, Proceedings of the American Marketing Association Marketing Educators’ Summer Conference 1995, Washington, DC. Weick, K. (1969), The Social Psychology of Organizing, Addison-Wesley, Reading, MA. (Nigel F. Piercy holds the Sir Julian Hodge Chair in Marketing and Strategy, and Nikala Lane is a Lecturer in Management, both at the Cardiff Business School, University of Wales, Cardiff, UK.)